Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Accepted
Hybrid loan management approach caused integration issues and objective tension.
Conclusion
The Department did not employ a specialist loan management company. It told us that it adopted a hybrid approach, with separate loan agents for culture and sport and a managed service provider, to the management of its loan book in line with a recommendation from PwC.10 The Department also said that the insights its loan agents had on those bodies in receipt of a loan had been invaluable in helping it to understand the borrowers,11 and that the range of professional services available from PwC includes loan management and insolvency.12. However, the two loan agents had initially set up separate loan management systems, which subsequently required integration.13 The Department also acknowledged that there was a tension for both itself and its loan agents between its primary objective for the loan book of maximising the financial returns to the Exchequer, and the policy objective of maintaining the viability of the culture and sports sectors, which it had sought to address with clear protocols for decision–making.14 Management of PwC contract
Government Response Summary
The government agrees to undertake a strategic review of its loan book management by March 2026 including an external evaluation of the efficiency and effectiveness of the current operating model, and will consider alternative management options.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Target implementation date: March 2026 1.2 DCMS’s Loan Book management refers to loans issued to selected organisations as part of the broader Culture Recovery Fund (CRF) and Sport Survival Package (SSP) COVID- 19 interventions. These packages were originally designed to ensure no sport or cultural organisation would go insolvent as a result of COVID-19 restrictions, with loans awarded to organisations able to demonstrate eligibility and financial need. The loan terms included a repayment holiday, allowing organisations time to recover before repayments commenced. 15 This time also allowed the department to enhance its capability and capacity to manage the loan book. 1.3 The Loan Book Management programme has two clear objectives, which are followed by all delivery partners. The financial objective is always considered first: • Maximising financial return to the Exchequer (the “financial objective”); whilst • Balancing the department's long-standing and enduring interest in protecting the long-term sustainability of the country's sporting and cultural sectors and the benefits they generate (the “policy objective”). 1.4 The department took steps to ensure it had a robust model in place, having analysed a range of options and taken external advice. This has ensured that the department has received 97% of the repayments scheduled at the date of the NAO report, which demonstrates the positive performance of the department’s loan book management approach. 1.5 The department will be undertaking a strategic review of its loan book management in this financial year. This will involve a review of the efficiency and effectiveness of the current operating model, including an external evaluation. The review will consider alternative management options and is further referenced in the department’s response to recommendation 3.